The Consumer Discretionary Select Sector SPDR Fund (XLY) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. XLY is a SPDR State Street Global Advisors Consumer Cyclical fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between XLY and VXF? And which fund is better?
The expense ratio of XLY is 0.06 percentage points higher than VXF’s (0.12% vs. 0.06%). XLY also has a higher exposure to the consumer cyclical sector and a lower standard deviation. Overall, XLY has provided higher returns than VXF over the past 11 years.
In this article, we’ll compare XLY vs. VXF. We’ll look at portfolio growth and risk metrics, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss XLY’s and VXF’s holdings, fund composition, and performance and examine how these affect their overall returns.
|Name||Consumer Discretionary Select Sector SPDR Fund||Vanguard Extended Market Index Fund ETF Shares|
|Category||Consumer Cyclical||Mid-Cap Growth|
|Issuer||SPDR State Street Global Advisors||Vanguard|
The Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.
The Vanguard Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.
XLY’s dividend yield is 0.56% lower than that of VXF (0.63% vs. 1.19%). Also, XLY yielded on average 3.39% more per year over the past decade (18.86% vs. 15.47%). The expense ratio of XLY is 0.06 percentage points higher than VXF’s (0.12% vs. 0.06%).
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The Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.
XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.
VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.
XLY is 82.75% more exposed to the Consumer Cyclical sector than VXF (94.1% vs 11.35%). XLY’s exposure to Consumer Defensive and Technology stocks is 2.25% higher and 23.04% lower respectively (5.34% vs. 3.09% and 0.57% vs. 23.61%). In total, Financial Services, Real Estate, and Healthcare also make up 35.97% less of the fund’s holdings compared to VXF (0.00% vs. 35.97%).
|The Home Depot Inc||8.74%|
|Nike Inc B||4.45%|
|Lowe’s Companies Inc||3.58%|
|Booking Holdings Inc||2.35%|
|TJX Companies Inc||2.12%|
XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.
Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.
|Square Inc A||1.2%|
|Zoom Video Communications Inc||1.04%|
|Uber Technologies Inc||0.93%|
|Blackstone Group Inc||0.83%|
|Snap Inc Class A||0.8%|
|Twilio Inc A||0.73%|
|CrowdStrike Holdings Inc Class A||0.63%|
|Marvell Technology Inc||0.6%|
VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.
Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.
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The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Mean Return of 1.47 with a Treynor Ratio of 16.69 and a Standard Deviation of 15.97. Its R-squared is 80.84 while XLY’s Alpha is 6.96. Furthermore, the fund has a Sharpe Ratio of 1.06 and a Beta of 1.02.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Beta of 1.23 with a Alpha of -3.26 and a Mean Return of 1.24. Its Standard Deviation is 18.04 while VXF’s R-squared is 85.73. Furthermore, the fund has a Sharpe Ratio of 0.79 and a Treynor Ratio of 10.92.
XLY’s Mean Return is 0.23 points higher than that of VXF and its R-squared is 4.89 points lower. With a Standard Deviation of 15.97, XLY is slightly less volatile than VXF. The Alpha and Beta of XLY are 10.22 points higher and 0.21 points lower than VXF’s Alpha and Beta.
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XLY had its best year in 2013 with an annual return of 42.74%. XLY’s worst year over the past decade yielded 1.66% and occurred in 2018. In most years the Consumer Discretionary Select Sector SPDR Fund provided moderate returns such as in 2015, 2017, and 2012 where annual returns amounted to 9.93%, 22.77%, and 23.6% respectively.
The year 2013 was the strongest year for VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in XLY would have resulted in a final balance of $63,066. This is a profit of $53,066 over 11 years and amounts to a compound annual growth rate (CAGR) of 18.86%.
With a $10,000 investment in VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.
XLY’s CAGR is 3.39 percentage points higher than that of VXF and as a result, would have yielded $18,936 more on a $10,000 investment. Thus, XLY outperformed VXF by 3.39% annually.
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